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in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most instances, to discharge the debtor from further liability. In the United States, bankruptcy is controlled by a federal law adopted in 1898 and amended several times, as by the Chandler Act (1938) and the Bankruptcy Reform Act (1978).

Bankruptcy proceedings may be voluntary (instituted by the debtor) or involuntary (instituted by creditors). The debtor may be insolvent—i.e., unable to pay all debts even if the full value of all assets were realized—or may become insolvent when current obligations mature. Bankruptcy is also permitted when the discharge of debts would otherwise be unduly delayed, e.g., if the debtor has fraudulently transferred property to put it out of a creditor's reach. When a person or corporation has declared or been adjudged bankrupt, preferred creditors (e.g., unpaid employees, or the federal government) are paid in full, and the other creditors share the proceeds of remaining assets.

The bankrupt individual receives more lenient treatment in the United States than in perhaps any other country, so that business initiative is not stifled by the threat of criminal or civil penalties following unintentional commercial failure. This ideal is evident in Chapter 11 of the bankruptcy code, which permits courts to reorganize the assets of failing businesses instead of ordering complete liquidation of these assets. The 1978 revision of the code made it easier for corporate management to remain in control of a company during reorganization. These more lenient provisions led to a rapid increase in filings in the 1980s and 1990s. In 2005 Congress passed a significant revision of the bankruptcy code affecting individuals, prompted in part by the increase in filings since 1978. Under the new law, it is harder for an individual to file a Chapter 7 bankruptcy, which extinguishes a person's debts, and it is easier for creditors to secure repayment of a debt over time. The changes were strongly supported by banks and credit card companies, but were also criticized by a number of bankruptcy experts for placing additional burdens on middle income families while not closing loopholes that benefit bankrupt corporations and wealthy individuals. Chapter 9 of the code provides for the reorganization of bankrupt municipalities.


See study by T. Jackson (1986).


See also Poverty.
Birotteau, César
ruined by bad speculations and dissipated life. [Fr. Lit.: Greatness and Decline of César Birotteau, Walsh Modern, 58]
Black Friday
day of financial panic (1869). [Am. Hist.: RHDC]
Black Tuesday
day of stock market crash (1929). [Am. Hist.: Allen, 238]
green cap
symbol of bankruptcy. [Eur. Hist.: Brewer Note-Book, 390–391]
Harland, Joe
drunk who loses fortune on Wall Street. [Am. Lit.: The Manhattan Transfer]
Hassan, Abu
pretends to be dead to avoid debts. [Ger. Opera: von Weber, Abu Hassan, Westerman, 138–139]
Henchard, Michael
loses business and social standing through bad financial planning. [Br. Lit.: Mayor of Casterbridge]
Lydgate, Tertius
driven deeper into debt on daily basis. [Br. Lit.: Middlemarch]
Panic of 1873
bank failures led to extended depression. [Am. Hist.: Van Doren, 267–268]
Queer Street
condition of financial insolvency. [Am. Usage: Misc.]
References in periodicals archive ?
MyBKHelp is a resource helping clients understand the often confusing bankruptcy laws and works to devise a plan to meet a client's economic goals, including debt repayment strategies that ease the terrible burden on their family or company.
Although the new law was tailored to certain legislation that fits into the UAE culture and market, it was guided by the bankruptcy law in the US, UK, Singapore and elsewhere.
Kitchens' specialties within bankruptcy law include business bankruptcy, creditor and debtor rights, closely held businesses, securities and corporate finance.
Utah Bankruptcy Law Center is a law firm licensed to practice law in the state of Utah.
Everything you need to know in 60 minutes about the complex relationship between state mechanic's lien law and federal bankruptcy law and how you should be advising your clients who are enforcing mechanic's liens on the property of debtors that have filed for bankruptcy
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There is probably nothing that a landlord can draft to bar a debtor-tenant from picking and choosing, to the extent otherwise permitted by bankruptcy law.
The new, combined product includes: Norton Bankruptcy Law and Practice 2d with analysis and advice on all aspects of bankruptcy from more than 100 bankruptcy judges, practitioners and "scholars"; the full text of cases in West's Bankruptcy Reporter from 1979 to present; thousands of relevant case notes organized by topic and code or rule; over 500 model forms; Norton Bankruptcy Code and Rules, including the bankruptcy code and related statutes, Federal Rules of Civil Procedure, Federal Rules of Evidence, official forms and fee schedules, all with editorial analysis; an uplink to West's bankruptcy case database; and, Norton Bankruptcy Law Advisor Newsletter, with editorial that includes coverage of new developments in b ankruptcy law and practice.
The webinar is led by an expert with extensive experience teaching Family Lawyers the basics of bankruptcy law and how to apply that knowledge to be more effective at protecting their firm from bankruptcy, Henry David (partner, Snell & Wilmer LLP), and focuses on:
Today, the equally untenable arguments of credit-card industry proponents of failed bankruptcy law changes "get their last gasp at one more unbalanced hearing out of Congress before Democrats assume control," according to the National Association of Consumer Bankruptcy Attorneys (NACBA).
China has recently entered a significant stage in its economic transition with the promulgation of a new bankruptcy law.
Henry Sommer, president of the National Association of Consumer Bankruptcy Attorneys (NACBA) and a Philadelphia bankruptcy attorney, said: "The bankruptcy law changes were premised on the faulty assumption, promoted by the credit card industry, that there was massive abuse going on by thousands and thousands of people who could pay their debts.

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